TREASURY

ECOFIN 20 June 2011

George Osborne: The Economic and Financial Affairs Council was held in Luxembourg on 20 June 2011. The following items were discussed:
	Legislative proposals on economic governance
	The Council updated its general approach, with a view to concluding negotiations with the European Parliament in advance of the European Council on 23-24 June. The UK is content with the updated text: on the issue of economic dialogue involving the European Parliament, I ensured explicit text that member state attendance at public debates and hearings would be voluntary. In addition, the UK’s partial opt-out from the fiscal frameworks directive remains protected.
	Proposal for a Decision of the European Parliament and the Council granting an EU guarantee to the European Investment Bank (EIB) against losses under loans and guarantees for projects outside the EU
	The Council endorsed the outcome of the trialogue discussions (Council, European Parliament and Commission) on the EIB’s external lending mandate. This political agreement will, with the EP, be formally adopted later in the year. During the Council discussion, I emphasised the importance of Iceland repaying the money it owes to British and Dutch taxpayers. The following Council statement was then agreed to accompany the mandate:
	“The Council takes note of the issuance of the reasoned opinion of the EFTA Surveillance Authority (ESA) which states that Iceland has failed to comply with obligations resulting from the Deposit Guarantee Directive and the EEA Agreement. The Council underlines the importance of this reasoned opinion and encourages Iceland to take all steps necessary to swiftly fulfil all its EEA obligations”.
	Regulation on over-the-counter derivatives, central counterparties and trade repositories (EMIR)
	Finance Ministers held a policy debate, which focused on two issues:
	The authorisation and supervision of central counterparties, in particular the role played by the European Securities and Markets Authority;
	The scope of the regulation, That is, whether it should apply to all types of derivatives.
	I emphasised that further work would be needed to achieve a regulation consistent with G20 commitments, single market principles and the agreement on the establishment of the European supervisory authorities last year. The Hungarian presidency will pass on a progress report to the Polish presidency, who will aim to agree a general approach following further work by the Council.
	Proposal for a Regulation of the European Parliament and the Council establishing technical requirements for credit transfers and direct debits in euros
	The Council briefly discussed the draft regulation. Some member states raised concerns, and the Commission agreed to work on a transitional process in order to address these. The Polish presidency will start negotiations with the European Parliament shortly. The UK supports the proposed regulation, which will facilitate the creation of a single market for electronic payments in euros.
	European Semester
	The Council approved the macro-economic component of the European semester country-specific recommendations. The Government expressed concerns about a lack of time for parliamentary scrutiny and abstained from the vote accordingly. The recommendations will be endorsed by the European Council on 24 June as Council recommendations, and formally adopted by the ECOFIN Council on 12 July,
	European Banking Authority stress testing
	Over dinner, Finance Ministers discussed backstop support schemes in the banking sector, with a view to the publication in early July of the results of the 2011 stress tests. The Government support the implementation of coherent and transparent measures to address any vulnerabilities in the EU’s banking system,
	European Stability Mechanism (ESM)
	In an inter-governmental meeting preceding ECOFIN, Finance Ministers discussed the draft treaty establishing the ESM which will be presented to the European Council for endorsement. In particular, it was agreed that the ESM would not assert preferred creditor status in the case of countries currently in receipt of assistance, should those member states access ESM funding post-2013. I also secured the removal of any language with respect to collective action clauses that might impact on the ability of euro area member states to issue debt under English law.
	The Government’s opposition to the use of the European financial stabilisation mechanism for any second package of financial assistance for Greece has been made clear.

EDUCATION

Initial Teacher Training

Michael Gove: I am launching today a discussion about my strategy for initial teacher training. This document, “Training our next generation of outstanding teachers”, sets out my proposals for initial teacher training, providing detail of how we intend to meet the commitments made in the White Paper, “The Importance of Teaching”. The document is for discussion with training providers, teachers, trainees, head teachers, pupils, parents and the general public, before I announce final policy later in the year, ready for changes to begin to take effect from 2012-13 teacher training courses.
	If we want every child to have the chance to take their full and equal share in citizenship and shape their own destiny, then we need to give them the best possible start in life, and this means the best possible education. This
	begins before school, and high-quality early years learning provides the foundation for everything that follows. I want to be sure that the teachers who build on this foundation are giving the children of this country an education that ranks with the best in the world.
	We have some excellent teachers in this country, but many who could make a huge difference in the lives of children choose other professions. Our teachers are trained in some of the best institutions in the world, but the schools which employ these teachers do not get enough of a say in how they are trained, and training does not focus sharply on the techniques teachers most need, such as behaviour management and the effective teaching of reading. We value our teachers highly, but the current system of funding does not incentivise the best. The system needs to change.
	The strategy sets out proposals to build on the strengths of the existing system, as well as addressing some important weaknesses. The proposals cover:
	Giving schools, as prospective employers, a stronger influence over the recruitment and selection of trainees and the content of their training;
	Permitting and encouraging schools, often working as groups of chains, to lead their own high-quality initial teacher training in partnership with a university;
	Offering high-quality graduates and science and maths specialists significantly better financial incentives to train as teachers;
	Offering financial incentives to all trainees with at least a 2.2 so that teacher training continues to be attractive, and offering incentives of up to £20,000 for the best trainees in priority subjects. From September 2012 the maximum charges for mainstream university-based ITT courses will be £6,000, or £9,000 where the university has agreement from the Office for Fair Access;
	Continuing to subject ITT provision to quality controls that focus on the quality of placements and selection;
	Requiring all trainees to have high standards of mathematics and English and excellent subject knowledge demonstrated through achieving a second class degree or above to qualify for any financial incentives.
	Copies of the discussion document will be placed in the Libraries of both Houses.

FOREIGN AND COMMONWEALTH AFFAIRS

General Affairs Council and Foreign Affairs Council, 20-21 June 2011

David Lidington: The Foreign Affairs Council and General Affairs Council were held on 20-21 June in Luxembourg. My right hon. Friend the Foreign Secretary and I represented the UK.
	The agenda items covered were as follows:
	Foreign Affairs Council (FAC)
	The FAC was chaired by Baroness Ashton. A provisional report of the meeting, and all conclusions adopted, can be found at:
	http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/122937.pdf.
	Sudan
	Ministers agreed conclusions (see link) which:
	Expressed support for the African Union’s efforts to facilitate a cessation of hostilities in Southern Kordofan.
	Called on all parties to stop hostilities.
	Denounced the 19 June attack against the UN mission.
	Agreed to follow a comprehensive EU approach to Sudan.
	The Foreign Secretary underlined the need to support the efforts of the Mbeki panel and continued political dialogue with Khartoum, which should include messages on debt relief. He also emphasised the need for a continuing UN presence after 9 July, to ensure the protection of civilians and humanitarian access.
	European Neighbourhood Policy
	Ministers agreed conclusions (see link) which endorsed the review of the European neighbourhood policy (ENP), setting out an ambitious new approach to the EU’s neighbourhood. This review is in line with the Government’s goal of an enhanced EU offer to its neighbours, particularly those emerging from the Arab spring, holding out the prospect of profound economic integration for those who engage in meaningful democratic reforms.
	Western Balkans
	Ministers discussed Albania, Bosnia and Herzegovina, Serbia and Kosovo.
	On Albania, Ministers agreed conclusions (see link) deploring the deterioration of the political situation and increase in tensions following disputed municipal election results. They also urged the Albanian authorities to strengthen its reform efforts particularly in relation to the Copenhagen criteria and the 12 priorities identified in the European Commission’s 9 November 2010 opinion on Albania’s application for membership.
	The Foreign Secretary and other Ministers welcomed the appointment of Peter Sorensen as the new head of delegation in Bosnia and Herzegovina.
	The Foreign Secretary said that Kosovo needed to be given tangible reassurance of its EU future. Ministers also noted Serbia’s EU ambitions.
	Immediately following the FAC, I attended the western Balkans forum with other EU Foreign and Europe Ministers and Foreign Ministers from across the western Balkans. The meeting was chaired by Baroness Ashton, the Commissioner for Enlargement (Fule) and the Hungarian Foreign Minister (Martonyi). Many speakers emphasised the continuing importance of regional co-operation in the context of EU enlargement. I made clear that we did not want to see a pause on enlargement after Croatia’s accession. The positive prospect of conditions-based enlargement was a driving force behind economic and political reform and as such demanded clear and collective commitment to the process.
	Belarus
	Ministers adopted conclusions (see link) and agreed further restrictive measures on Belarus. The conclusions set out the EU’s concerns about the deterioration of human rights, democracy and the rule of law in Belarus. On restrictive measures, the Foreign Secretary spoke in favour of including three companies closely linked to the Belarusian leadership. These were agreed.
	Syria
	Ministers agreed conclusions (see link) which condemned violence, reiterated the call for reform, and laid the ground for further work on sanctions.
	On the same day as the FAC, the Foreign Secretary made a statement on Syria:
	“President Assad’s speech today was disappointing and unconvincing. If President Assad is to restore any credibility the Syrian people need to see concrete action, not vague promises. We have been clear that rapid and real implementation of substantial reforms, addressing the legitimate demands of peaceful Syrian protesters, is what is urgently needed. There must also be an immediate end to violence by Syrian security forces, the release of all political prisoners, an end to the torture and abuse of those who remain in detention and access given to international humanitarian agencies.”
	Libya
	Conclusions were agreed (see link) setting out the EU’s approach to a ceasefire and a political solution based on Gaddafi’s departure. The conclusions also referred to sanctions measures, such as the listing of Gaddafi-controlled ports in Libya.
	Yemen
	Ministers agreed conclusions (see link) which called for all to respect the current ceasefire and reiterated the need for a solution based on the Gulf Co-operation Council’s initiative.
	Middle East Peace Process
	Over lunch, Ministers discussed the current situation in the peace process, including: the role of the Quartet; the handling of a possible unilateral declaration of Palestinian independence in September; and options for encouraging the two sides to restart negotiations.
	General Affairs Council (GAC)
	The GAC was chaired by the Hungarian EU presidency (Foreign Minister Martonyi). A draft record of the meeting can be found at:
	http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/genaff/122949.pdf.
	June European Council
	Ministers examined the draft conclusions for the European Council of 23-24 June. The discussion covered the main agenda items: economic policy (progress on the euro-plus pact and on the EU’s response to the sovereign debt crisis); migration (review of progress in implementing asylum and migration polices); Croatia (review of progress on accession negotiations); and events in the southern neighbourhood.
	I emphasised the need for positive language on economic growth, and for the right approach on deregulation for small and medium-sized enterprises. I also sought references on trade, particularly in relation to the Doha round.
	On the European neighbourhood policy, I pushed for a clear Council position welcoming the review to be reflected in the Council conclusions.
	European Semester
	The presidency set out recommendations on national reform programmes submitted by member states under the Europe 2020 strategy for jobs and growth. The Council agreed to forward texts to the European Council. I abstained from voting on the grounds that there had not been sufficient time to complete UK parliamentary scrutiny. I asked that more time be given for the scrutiny processes in future.
	18 Month Presidency Programme
	Poland, Denmark and Cyprus presented the 18-month programme of the EU presidencies. The programme was endorsed.
	I will deposit copies of this note in the Libraries of both Houses, and I will continue to update Parliament on Foreign and General Affairs Councils as and when future meetings are held.

WORK AND PENSIONS

Prescribed Diseases

Chris Grayling: My noble Friend, the Under-Secretary of State, responsible for welfare reform, Lord Freud of Eastry, has made the following statement.
	The Social Security (Industrial Injuries) (Prescribed Diseases) Amendment Regulations 2011 have today been laid before Parliament. The regulations implement, from 18 July 2011, the recommendations set out in the Industrial Injuries Advisory Council’s reports:
	“Bronchiolitis Obliterans and Food Flavouring Agents”, Cm 7439, published in July 2008; and
	“Chromium and sino-nasal cancer”, Cm 7740, published in December 2009.
	The recommendations made in the report(s) were to add the following two diseases to the schedule of diseases prescribed under the industrial injuries disablement benefit scheme:
	Bronchiolitis obliterans, and
	Chromium and sino-nasal cancer.
	These regulations implement those recommendations.
	This means that people suffering from bronchiolitis obliterans can claim industrial injuries disablement benefit if their work involved the production of diacetyl, or the manufacture of food flavourings containing diacetyl, or the manufacture of food flavoured by diacetyl.
	Those suffering from chromium and sino-nasal cancer can claim industrial injuries disablement benefit if they had worked in hexavelent chrome plating or the manufacture of inorganic chromates.

Occupational and Workplace Personal Pension Schemes

Steve Webb: I am pleased to be able to publish today the Government’s initial response to the call for evidence on regulatory differences between occupational and workplace personal pension schemes.
	Automatic enrolment into workplace pensions will change the pensions landscape dramatically. It is therefore essential that the regulatory landscape to deliver these changes remains appropriate.
	The call for evidence provoked varied and wide-ranging responses and has helped to identify areas of attention to ensure the success of the workplace pension reforms. The most contentious issue is short-service refund rules and I remain convinced that these rules pose a risk to our goals of increasing pension savings. Responses to the call for evidence show, however, that there are no easy answers and that removing these rules will result in more small, stranded pension pots. So we believe that a decision on short-service refunds must take account of a solution for small pots across the whole pensions industry.
	This solution will go to the heart of what the pensions landscape should look like after 2012 and we need to fully understand the potential impact of this on individuals,
	schemes and employers. We will therefore undertake further analysis which builds on the call for evidence, in order to publish a more detailed follow-up paper in the autumn. This paper will outline how we intend to change short-service refunds, together with potential ways to manage the burden of small pension pots after automatic enrolment.
	I would emphasise that short-service refunds are unlikely to continue in their current form. As this area remains under review, I would encourage employers not
	to choose a new pension scheme on the assumption that the default refund of employer contributions will be available after automatic enrolment.
	I would like to thank all those groups who have been engaged on this issue and responded to our call for evidence.
	The Government response will be placed in the Library and will be made available later today on the Department’s website.